Q.A well-established practice that is customarily followed by merchants in a particular trade, and which becomes part of a contract unless the parties expressly exclude it, is known as:

This question is testing the specific difference between a trade-specific commercial practice and the other sources of law (a court decision, or an Act itself). …

Why (b) is correct: Mercantile usage refers to a well-established, uniform practice followed specifically within a particular trade or business. Where a written contract in that trade is silent on a point, courts read the established usage of that trade INTO the contract — unless the parties have expressly excluded it. This is exactly the definition given in the question stem.

Why the distractors are wrong:

• (a) Judicial precedent is a court's binding DECISION on a point of law in a specific case — it is a source of law created by judges, not a trade practice followed by merchants. …

Students often confuse "custom" (a general, long-established local practice) with "mercantile usage" (a practice specific to a particular TRADE). While closely related, mercantile usage is narrower and trade-specifi …